AUSSIE 10-YEAR TECHS: (H6) Marked Lower

Gold prices rose moderately on Tuesday supported by a modest increase in pricing for a 10 December Fed rate cut and lower 2-year yield as well as a pullback in risk. Also the US dollar finished down slightly. Bullion rose 0.6% to $4067.05 after dipping below $4000 early in the European session.

• USD OIS pricing rose 5pp to a 50% chance of December Fed easing. The policy outlook remains unclear given the delay in data due to the government shutdown. It is beginning to be released now with September payrolls scheduled for Thursday but some October data may never be calculated as surveys were unable to be sent out.
• October 18 jobless claims printed at 232k on Tuesday, in line with the September average. The November NY Fed services index rose to -21.7 from -23.6.
• Gold rose to $4067.05/oz off the high of $4082.29. It fell to $3998.08 earlier, remaining above the 50-day EMA at $3932.1. The move lower over late October appears to have been a correction that unwound the overbought position but the 1.6% rise in November suggests that it is over. Initial resistance is at $4106.7, 17 November high.
• Silver increased 0.9% to $50.686 after reaching $51.181. It fell to $49.363, holding above the 50-day EMA at $47.390.
• Equities sold off with the S&P down 0.8% and Euro stoxx -1.9%. Oil prices were higher though with Brent +0.9% to $64.75/bbl. Copper fell 0.9%.

USD/CNH tested 20-day EMA resistance on Tuesday, but couldn't sustain a breach of this level (currently near 7.1160/65). USD/CNH tracks close to 7.1115 in early Wednesday dealings. CNH was little changed for Tuesday's session, matching broader steady USD index levels. For USD/CNH, we look to be tracing out broader ranges for now, although we suspect the market bias we remain to fade upticks in the pair. Only a break above the 100-day EMA (near 7.1460) is likely needed to shift current thinking. The pair has spent little time above this resistance point since early May (see this chart below). 

• Spot USD/CNY finished up at 7.1095, while the CNY CFETS basket moved higher to 97.96, just short of recent multi month highs.
• The CNH/JPY cross remains in focus, making another high just above 21.90 in Tuesday trade. Upside focus remains on a test of 22.00. Fresh verbal jawboning on yen weakness from the FinMin was not strong enough to drive a meaningful yen rebound, while weaker equities aren't driving a safe haven yen bid either (policy uncertainty around BoJ hike timing remains a headwind for the yen).
• From overnight, BBG noted: "China made its biggest daily purchase of American soybeans in two years, in a move that ends a temporary pause and appears to signal a commitment to a trade truce reached late last month."
• In US trade on Tuesday, the Golden Dragon equity index managed its first rise since Nov 10 (up 0.42%).
• The local data calendar still awaits Oct FDI figures, while tomorrow delivers the 1yr and 5yr LPR outcomes, with no change expected. 

Fig 1: USD/CNH Versus Key EMAs 

Source: Bloomberg Finance L.P./MNI 

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 96.245 @ 16:26 GMT Nov 18
• SUP 1: 96.135 - Low Nov 13
• SUP 2: 95.900 - Low Jan 14 (cont.)
• SUP 3: 95.760 - Low 14 Nov ‘24

Prices slid sharply on the better-than-expected jobs data, pushing prices through first support at 96.280. This makes for a fresh contract low, exposing 95.900 on the continuation chart for direction. The slower pricing for additional RBA easing should keep the front-end of the curve under pressure. This keeps prices well below prior resistance at 96.615, the Sep 12 high, and refocuses attention on 95.900 as the next major support.